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ACA Backs Charter Effective (Over-the-Top) Competition Petition

Big Three cable operator has the backing of the small and mid-sized cable trade association for its petition for an FCC declaration of effective competition in Massachusetts and Hawaii, the only two states where basic rate regulation has not gone away, based on the availability of over-the-top DirecTV Now.

Cable ops are looking to establish the precedent now in case cord-cutting continues and over-the-top becomes the video delivery system of choice.

The commission, with the strong backing of cable operators including ACA in 2016 voted to reverse the rebuttable presumption that cable operators are not subject to local competition and assume cable systems face local market competition (primarily given the ubiquity of satellite TV) unless telecom regulators or other challengers could prove they did not."

A finding of effective competition lifts basic cable price regulation, which has now been lifted in all but a handful of systems.

ACA says given that DirecTV's broadband DirecTV NOW video service is an affiliate of a Local Exchange Carrier (AT&T) and provides video service directly to subs in the relevant franchise areas, it meets the test for competition.

That test is: "[A] local exchange carrier or its affiliate (or any multichannel video programming distributor using the facilities of such carrier or its affiliate) [that] offers video programming services directly to subscribers by any means (other than direct-to-home satellite services) in the franchise area of an unaffiliated cable operator which is providing cable service in that franchise area, but only if the video programming services so offered in that area are comparable to the video programming services provided by the unaffiliated cable operator in that area."

"DIRECTV NOW is a substitute for traditional pay-TV services. Not only does it meet the Commission’s definition of a “comparable” video programming service," says ACA, "it has clearly positioned itself in the market as a substitute for cable and DBS, using ad campaigns that specifically encourage viewers to reject traditional pay-TV service and replace it with DIRECTV NOW."